Back of napkin calculations in east bay

[Ari Archer]

I'm curious what sort of back of napkin calculations people use in the East Bay to get a quick picture of cash flow. It would appear that nothing passes the 2% test. 50% rule seems to be working ok, but I'm curious if anyone uses it around here or if anyone has other quick tests they run. I know every place is different and you need to run full numbers on places you're really interested in. Just looking for a broad/simple first test.

Thanks!

[Arlen Chou]

@Ari Archer the generic "rules of thumb" on BP really don't apply in the Bay Area.  As @Michael Simpson has pointed out, you need to find the hidden value in the property.  Most of this hidden value will mean that you need a good amount of working capital to get your building to a BP "rule of thumb".  If you really want a VERY simple rule I would go with 1% after your stabilization period.  But remember cash flow will be dependent upon how much you put into the deal at purchase, how much you spend to improve, and your ability/mount you refinance money back out at a substantially later point in time.  

I highly doubt you will be able to find anything on Redfin or any other service, for Bay Area proper, straight out of the box.

-Arlen